Why is it So Much Easier to Lose than to Win?
- Thread starter Flashboy
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I'm going to move this to "Psychology" and out of trading since it's non-specific.
However, I'd like to comment that I also have a tendency to trade against the trend - especially when it's an extremely strong trend. If you think logically about this, it should be obvious that it's a bad idea. Now that I've developed a bit more, I find that I'm able to catch myself as I look at a trend and call it "irrational" merely because it's rocketing towards never seen before heights or trying to bottom pick just because something is at a significant low.
The programmed nature to "be right" seems to be more important than actually trading right. When you think about it, it's better to be right for the wrong reason. Follow the flow - don't try swimming against the current, even if you know you're right. Right, wrong - neither matter when you don't have the power to influence. You are not a voice in the crowd, shouting for logic. You're just a voice in the crowd. Shout what they shout.
However, I'd like to comment that I also have a tendency to trade against the trend - especially when it's an extremely strong trend. If you think logically about this, it should be obvious that it's a bad idea. Now that I've developed a bit more, I find that I'm able to catch myself as I look at a trend and call it "irrational" merely because it's rocketing towards never seen before heights or trying to bottom pick just because something is at a significant low.
The programmed nature to "be right" seems to be more important than actually trading right. When you think about it, it's better to be right for the wrong reason. Follow the flow - don't try swimming against the current, even if you know you're right. Right, wrong - neither matter when you don't have the power to influence. You are not a voice in the crowd, shouting for logic. You're just a voice in the crowd. Shout what they shout.
We can only blame our egos. We are trained as babies that losing is the equivalent to failing. So we naturally assume when we take a monetary loss on a position that we have failed in that trade - therefore the hesitation to take a loss no matter how small.
A trade is either good or bad. Good trades can be profitable or unprofitable. Bad trades can also be profitable or unprofitable. The difference is in how they were executed.
Always remember that no single position should make or break you and learn to love losers!
A trade is either good or bad. Good trades can be profitable or unprofitable. Bad trades can also be profitable or unprofitable. The difference is in how they were executed.
Always remember that no single position should make or break you and learn to love losers!
Losing traders engage in self-destructive behaviors based on a need to be right instead of profitable such as:
adding to a losing position with the idea of averaging down
taking 1/2 of a winning position off early and moving their stop to b/e, believing they're getting a "free" trade and "playing" with opm
taking profits early under the false assumption that you can't lose by taking a profit
not setting a hard stop when entering a position
not cutting losing positions early and not adding to winning positions early thereby ensuring a harder time to make up drawdowns
adding to a losing position with the idea of averaging down
taking 1/2 of a winning position off early and moving their stop to b/e, believing they're getting a "free" trade and "playing" with opm
taking profits early under the false assumption that you can't lose by taking a profit
not setting a hard stop when entering a position
not cutting losing positions early and not adding to winning positions early thereby ensuring a harder time to make up drawdowns
Asked and answered.
If you must trade against an existing trend, then, in my opinion, it is safest to trade against that trend when a smaller trend has begun to form in the opposite direction. Entry should be early, however, it should be based on tested setup criteria that have a demonstrated and established tendency rather than just wishful thinking and arbitrary timing. If you find yourself trading against the trend "just because," you will find that, on balance, it is much like pissing in the wind without a raincoat.
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